BEIRUT, Aug 19 (Reuters) - Syrian President Bashar al-Assadperformed Eid prayers in a Damascus mosque on Sunday, statetelevision showed, in his first appearance in public since aJuly bombing in the Syrian capital that killed four top securityofficials.

Assad, who is battling a 17-month-old uprising, wasaccompanied by his prime minister but not his vice president,Farouk al-Shara, whose reported defection was denied by thegovernment the previous day.

In the state TV footage, Assad was sitting cross-leggedduring a sermon in which Syria was described as the victim of aconspiracy hatched by the United States, Israel, the West andArab states but which would not "defeat our Islam, our ideologyand our determination in Syria".

The July 18 bombing at the state security headquarters inDamascus was a stunning blow to Assad, who lost a brother-in-lawin the attack, and fighting subsequently intensified with rebelsmaking inroads into Damascus and the commercial hub Aleppo.

Syrian authorities on Saturday dismissed reports that Sharahad defected as Assad's forces pursued an offensive againstrebels, bombarding parts of Aleppo in the north and attacking aninsurgent-held town in the oil-producing east.

Shara "never thought for a moment about leaving thecountry", said a statement from his office broadcast on statetelevision in response to reports that the veteran Baath Partyloyalist had tried to bolt to Jordan.

Assad, battling a spreading rebellion led by Syria's SunniMuslim majority, has been abandoned by a number of seniorofficials, including prime minister Riyadh Hijab two weeks ago.

Shara, whose cousin - an intelligence officer - announcedhis own defection on Thursday, is a Sunni Muslim from Deraaprovince where the revolt began against Assad, a member of theminority Alawite sect that is an offshoot of Shi'ite Islam.

The 73-year-old ex-foreign minister kept a low profile asthe revolt mushroomed but surfaced in public last month at astate funeral for three of the slain officials from Assad'sinner circle.

The statement said he had worked since the start of theuprising to find a peaceful, political solution and welcomed theappointment of Algerian diplomat Lakhdar Brahimi as a newinternational mediator for Syria.

Brahimi, who hesitated for days before accepting a job thatFrance's U.N. envoy Gerard Araud called an "impossible mission",will replace former U.N. Secretary-General Kofi Annan, who isleaving at the end of the month.

Annan's six-point plan to stop the violence and advancetowards political negotiations was based on an April ceasefireagreement which never took hold. The conflict has deepened sincethen with both sides stepping up attacks.

AIR POWER

Assad's forces have resorted increasingly to air power tohold back lightly armed insurgents in Damascus and Aleppo,Syria's largest city and business centre. More than 18,000people have died in the bloodshed and about 170,000 have fledthe country, according to the United Nations.

The Syrian Observatory for Human Rights said the armybombarded neighbourhoods in Aleppo. Rebels hold severaldistricts in the country's largest city and have tried to pushback an army counter-offensive.

State television said soldiers "cleared terrorists andmercenaries" - terms used by authorities to describe Assad'sarmed opponents - from the western district of Saif al-Dawla,where some of the heaviest fighting has taken place.

Internet footage which activists said was filmed in Saifal-Dawla on Saturday showed a plane making a low pass overbuildings and dropping two bombs.

The Observatory also said at least 20 armoured vehiclesmoved into the eastern town of Mayadeen in Deir al-Zor province,where Syria's 200,000 barrels per day of oil are produced.

More than 130 people were killed in Syria on Saturday, itsaid, including 15 in Deir al-Zor.

In the town of Tel, north of Damascus, local activists saidthe bodies of 40 people killed by bombardment were gatheredtogether for a joint burial. A picture showed what appeared tobe several corpses wrapped in colourful blankets on a street.

OBSERVERS SET TO LEAVE

Brahimi will have a new title, Joint Special Representativefor Syria. Diplomats said this was to distance him from Annan,who complained that his peaceful transition plan was crippled bydivisions between Western powers - who want Assad out - andRussia, his most important ally - in the U.N. Security Council.

Describing the situation in Syria as "absolutely terrible",Brahimi told Reuters he urgently needed to clarify what supportthe United Nations can give him and said it was too soon to saywhether Assad should step down - in contrast to Annan who saidit was clear the Syrian leader "must leave office".

The last U.N. observers who deployed in Syria four monthsago to monitor Annan's failed ceasefire will leave aftermidnight on Sunday, when their mandate expires.

They will leave a "liaison office" open in Damascus aftertheir departure, though its size and role have not beenfinalised, a U.N. spokeswoman said.